Supreme Court New South Wales Medium Neutral Citation: The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd (in liq) [2022] NSWSC 1081 Hearing dates: 23 June 2022, 1 July 2022 Date of orders: 12 August 2022 Decision date: 12 August 2022 Jurisdiction: Equity - Commercial List Before: Rees J Decision: Prayers for relief dismissed with costs. Catchwords: RECTIFICATION – principles at [72]-[75] – agent seeks rectification of agency agreement to secure repayment of commissions earnt prior to agreement – whether proof of common intention – evidence falls short of clear and convincing proof – no common intention – agency agreement not rectified. EQUITY – equitable charge – right to lodge caveat – real estate agent and property developer enter into agency agreements on large development – agent owed $3M commission for apartments already sold –– agent requests 'security' when negotiating further agency agreement – agent drafts caveat clauses 'to protect' commission – whether implied equitable charge – principles and case law review at [91]-[112] – no objective, contractual intention to confer proprietary interest – no equitable charge. REAL ESTATE AGENT – agency agreements – whether unenforceable for illegality – Property and Stock Agents Act 2002 (NSW) s 49(1) – agent must not obtain beneficial interest in property – exemption if client consents in approved form – contravention of s 49(1) does not render agency agreement unenforceable per se – client consents by agency agreement but not in approved form – agreement enforceable. Legislation Cited: Conveyancing Act 1919 (NSW), s 23C Corporations Act 2001 (Cth) Property and Stock Agents Act 2002 (NSW), s 49 Cases Cited: Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393 Aged Care Services v Macedonian Aged Care [2012] NSWSC 531 Arthur Yates & Company Pty Ltd v Vegetable Seeds Committee (1945) 72 CLR 37 Australian Gypsum Ltd & Australian Plaster Co Ltd v Hume Steel Ltd (1930) 45 CLR 54 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Bush v National Australia Bank (1992) 35 NSWLR 390 Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 Chan v Zacharia (1984) 154 CLR 178 Cinema Plus Ltd v Australia and New Zealand Banking Group Ltd (2000) 49 NSWLR 513; [2000] NSWCA 195 Clay v Clay (2001) 202 CLR 410; [2001] HCA 9 Coleman v Bone (1996) 9 BBR 16,235 Commissioner of Stamp Duties (NSW) v Carlenka (1995) 41 NSWLR 329 Dalgety and New Zealand Loan Limited v C Imeson Pty Ltd [1964] NSWR 638; [1963] SR (NSW) 998 Fabre v Arenales (1992) 27 NSWLR 437 Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215; [1997] HCA 17 Ghazal v Government Insurance of New South Wales (1992) 29 NSWLR 336 Guan v Lui [2021] NSWCA 65 Gynch v Polish Club Ltd (2015) 255 CLR 414; [2015] HCA 23 Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280 In the matter of C88 Project Pty Ltd [2022] NSWSC 126 In the matter of Swan Services Pty Ltd (in liq) [2016] NSWSC 1724; (2016) 12 BFRA 224 In the matter of Westpac Banking Corporation [2015] NSWSC 869; (2015) 18 BPR 35,501 Johns v Australian Securities Commission (No 2) (1992) 35 FCR 146 Jones v Dunkel (1959) 101 CLR 298 Lym International Pty Limited v Marcolongo [2011] NSWCA 303; (2011) 15 BPR 29,465 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 Morris Finance Ltd v Free [2017] NSWSC 1417; (2017) 18 BPR 37,223 Murphy v Wright [1992] NSWCA 168; [1992] NSW ConvR 55-652; (1992) 5 BPR 11,734 National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25 Newey v Westpac Banking Corporation [2014] NSWCA 319 Parker v McKenna (1874) LR 10 Ch App 96 Payne v Parker [1976] 1 NSWLR 191 Pedersen v Larcombe [2008] NSWSC 1362 Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31 Redglove Projects v Ngunnawal Local Aboriginal Council [2004] NSWSC 880 Roberts v Investwell Pty Ltd (in liq) [2012] NSWCA 134; (2012) 88 ACSR 689 Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd [2008] NSWCA 39 Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 4) [2017] NSWSC 436 Simic v New South Wales Land and Housing Corp (2016) 260 CLR 85; [2016] HCA 47 Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd [2018] QSC 98 Swinburne v Bose [2016] WASC 299 Swiss Bank Corporation v Lloyd's Bank Limited [1982] AC 584 Ta Lee Investment Pty Limited v Antonios [2019] NSWCA 24; (2019) 19 BPR 39153 Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489; [2011] NSWSC 1562 The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd [2021] NSWSC 1175 Troncone v Aliperti (1994) 6 BPR 97,455 Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 Texts Cited: Carter, JW, Contract Law in Australia (7th ed, 2018, LexisNexis) NSW Legislative Assembly, Parliamentary Debates (Hansard), 9 May 2002 at 1964-1970 Tyler, Young & Croft, Fisher & Lightwood's Law of Mortgage (3rd Australian ed, 2013, LexisNexis) Wigmore, JH, Wigmore on Evidence (3rd ed., 1940, Little, Brown and Co.) Category: Principal judgment Parties: The Property Investors Alliance Pty Ltd (Plaintiff) C88 Project Pty Ltd (First Defendant) VADO005 Pty Ltd (Second Defendant) The Trust Company (Australia) Ltd (Third Defendant) Wajo Investments Pty Ltd (Fourth Defendant) Representation: Counsel: Mr SA Lawrance SC / Mr JC Lee (Plaintiff) Mr D Neggo (First Defendant) Solicitors: Rutland's Law Firm (Plaintiff) Macpherson Kelly (First Defendant) File Number(s): 2021/22126 Judgment 1. HER HONOUR: The plaintiff, The Property Investors Alliance Pty Ltd (referred to by the parties as PIA), is a real estate agent retained by the first defendant, C88 Project Pty Ltd (in liquidation), to sell apartments in a development in Carlingford known as "The Somerset". The agent sold 317 apartments and, having received some $10 million in commission, remains owed some $18 million. By these proceedings, the agent seeks rectification of the agency agreement and a declaration that, under the terms of that agreement, it has an equitable charge over 27 unsold apartments. The agent also seeks orders for judicial sale. 2. The liquidator of C88 opposed the relief sought and, in addition, contended that, if the agency agreement gave rise to an equitable charge, then the agreement was void for illegality by reason of section 49(1) of the Property and Stock Agents Act 2002 (NSW). (Section 49(1) provides that an agent retained for the sale of property "must not obtain or be in any way concerned in obtaining a beneficial interest in the property.") The agent said there was no contravention of section 49(1) but, in any event, any contravention did not have the consequence that the clauses said to confer an equitable charge were unenforceable. WITNESSES, DOCUMENTS AND INFERENCES 1. The agent relied on evidence of its director, Yue (Justin) Wang, and solicitor, Rutland Cheung, together with expert evidence from valuer, Brett Davis. Mr Davis was not required for cross-examination. Mr Wang was a pleasant, professional gentleman who appeared straightforward and honest. He made reasonable concessions. I accept his evidence. The same can be said for Mr Cheung; no issues of credit arose and I accept his evidence. 2. The liquidator of C88 relied on evidence from its solicitors, Christopher Frawley and Nicholas Lavanda, directed to their efforts to persuade a director of C88, Sam Fayad, to give evidence in the proceedings. Neither was required for cross-examination and I accept their evidence. Jones v Dunkel 1. Mr Fayad did not give evidence for C88 and the agent invited the Court to infer that his evidence would have not assisted the plaintiff, noting that Mr Fayad had not sworn an affidavit in the proceedings despite directions made by the Court to do so and at a time before C88 went in to liquidation: Jones v Dunkel (1959) 101 CLR 298 at 320 (per Windeyer J). To this, the liquidator submitted that, whilst C88 was first ordered to put on its evidence by 25 February 2022, that order was varied to require its evidence to be served by 28 March 2022. Shortly before that date, C88's solicitors ceased to act; administrators were appointed to the company shortly afterwards. Whilst the full circumstances of C88's default in complying with the Court's directions were not known, any period of default was brief and likely explicable. 2. Before drawing a Jones v Dunkel inference, the missing witness must be a person who it would be natural for one party to call; the witness might be regarded as "in the camp" of one party or "a witness likely to be friendly to the interests of the party": Payne v Parker [1976] 1 NSWLR 191 at 201-202 (per Glass JA); Ghazal v Government Insurance of New South Wales (1992) 29 NSWLR 336 at 343 (per Kirby P with Mahoney and Clarke JJA agreeing). Mr Fayad is a director of C88. However, liquidators were appointed to the company three weeks' before the hearing and had the conduct of the defence of the proceedings. Whilst a director is obliged to cooperate with a liquidator, relations between a liquidator and a company's directors may range widely from amicable to hostile. I do not consider that Mr Fayad can be described as "in the camp" of the defendant company, in liquidation, by dint of his directorship alone. 3. Further, the rule in Jones v Dunkel may be applied where there is an unexplained failure by a party to call witnesses. If the failure to call the evidence is explained, the inference cannot be drawn. In Ta Lee Investment Pty Limited v Antonios [2019] NSWCA 24; (2019) 19 BPR 39153, it was sufficient explanation that the plaintiff no longer spoke to the missing witness: at [118], [137] (per Bathurst CJ, Beazley P and Macfarlan JA). The witness may be "hostile": Payne v Parker at 202 (per Glass JA). It may be the case that the witness would not be expected to co-operate by way of prior consultation or providing a proof of evidence, and a party is not obliged to call a witness 'blind' in order to avoid the inference being drawn against them: Fabre v Arenales (1992) 27 NSWLR 437 at 449-450 (per Mahoney JA, Priestley and Sheller JJA agreeing). 4. The liquidator's failure to call Mr Fayad is explained by the evidence of Mr Frawley and Mr Lavanda. Since being instructed to act in these proceedings, the liquidator's solicitors have tried to contact Mr Fayad to ascertain whether he would be willing to give evidence on behalf of C88. The only contact which the liquidator's solicitors have been able to make is with Mr Fayad's solicitor, who advised that Mr Fayad was in the United States and could not provide an affidavit. Mr Fayad's itinerary was supplied, according to which Mr Fayad was due to arrive in Sydney part-way through the first day of the hearing. After Mr Fayad's scheduled time of arrival, the liquidator's solicitor telephoned Mr Fayad's solicitor again and asked whether they could speak to Mr Fayad or arrange for him to attend court to give evidence. Mr Fayad's solicitor replied by text message, "Unfortunately he is quite unwell and has been advised to attend a doctor to do a COVID/influenza test. He will be unavailable for today." Whilst I should not be taken as accepting the truth of the contents of the text message, it is apparent that the liquidator's solicitors did their best to obtain Mr Fayad's assistance, which was not forthcoming for whatever reason. Accordingly, I decline to draw the inference. That said, Mr Fayad's failure to appear has the consequence that Mr Wang's evidence stands unchallenged and I consider him to be a credible witness. 5. In turn, the liquidator submitted that an adverse inference should be drawn from the agent's failure to adduce documents, "there are no documents. There are no corroborative documents of anything that was said." In particular, the email or cover letter by which the agent sent the Sole Agency Agreement to C88 is not in evidence; "The complete absence of documentary evidence makes it harder for the plaintiff to satisfy the clear and convincing requirement to succeed in the [rectification] case." The agent submitted that such documents would only be useful to the extent that they shed light on whether there had been a mistake; the absence of tendering such documents was said to be 'neither here nor there'. The agent's submissions rather presupposes that the content of such documents shed no light on the presence or absence of a mistake; in the absence of seeing the documents, it is not possible to say one way or the other. 6. A party's failure to produce documentary evidence to corroborate their account, where they might be expected to be in possession of such documents, may give rise to an inference that such documents as they may be expected to have would not support their account: Jones v Dunkel at 320 (per Windeyer J), citing with approval Wigmore on Evidence (3rd ed., 1940, Little, Brown and Co.), ("the failure to bring before the tribunal some circumstance, document or witness …"); Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [134] (per Callinan J); Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 at [44] (per Eames JA, with whom Buchanan JA agreed, noting that "the Jones v Dunkel principle can equally apply to missing documents as to missing witnesses"); Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 at [131]–[132]; Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd [2018] QSC 98 at [112]. 7. Aside from the agency agreements, there were few contemporaneous documents in evidence. Mr Wang may have left the preparation of documents to his staff, whose "English is better than me". Given the number of apartments which the agent was engaged to sell, and the potentially large amounts of commission, the absence of contemporaneous correspondence is a little surprising. Whether this is reflective of the longstanding business relationship between the agent and the developer, or the business practices of either or both, is unclear. The agency agreement was prepared from a template to which amendments were made to reflect the particular agreement reached between the agent and vendor. Where rectification of the agreement is now sought on the basis of a common mistake, the absence of any drafts or notes created in the course of preparing the agreement is also a little surprising. As such, I have drawn this inference, generally adversely to the agent, where documents which may have been expected to be brought forward to support its case were not adduced. FACTS 1. By reason of the agent's rectification suit, the facts are of wider compass than might otherwise be the case. The agent had a corporate real estate licence under the Property and Stock Agents Act. Mr Wang was the licensee in charge. Since 2009, the agent was retained by the developer, Dyldam, to assist with the sale of various developments. Mr Wang came to know Mr Fayad and Joseph Khattar, who Mr Wang understood to be the owners of Dyldam; Mr Wang mostly dealt with Mr Fayad. Dyldam had an in-house sales team and also used external real estate agents to assist in the sale of its residential developments. By 2014, the agent had become Dyldam's main external selling agent. Mr Fayad allocated some 1,600 apartments from five developments to the agent for sale in the 2014/15 financial year. 2. Dyldam generally used a special purpose vehicle for each development. In 2013, C88 was incorporated. Mr Fayad was sole director. (Mr Khattar and Chahida Khattar later became directors). In 2014, C88 acquired land in Carlingford for the purpose of a residential apartment development, to be constructed in four stages with each stage comprising a different strata scheme. Preparation of agency agreements 1. From time to time, the agent's solicitor, Mr Cheung, provided the agent with a template which the agent's staff used to prepare agency agreements. The agent prepared roughly 100 agency agreements using the template; Mr Wang had a good understanding of the template. When Mr Cheung noticed a legislative change or considered that the template should be amended to better protect the agent, he sent an updated template for Mr Wang's consideration. In 2011 or 2012, Mr Cheung added clauses to the template to permit the agent to lodge a caveat "to better protect him in getting the commissions from developers." 2. As to how each agency agreement was prepared, Mr Wang usually negotiated the terms of the agreement with the vendor and then instructed his staff to amend the template accordingly. Mr Wang told his staff "some few main point" that needed to be addressed in the agreement but "hardly" gave written instructions. Mr Wang's staff were not legally trained: one was a business manager with a commerce degree; the other was a listing agent whose English was better than Mr Wang's. 3. Several agency agreements were entered into between the agent and C88 in respect of the Carlingford development. As the template changed over time, so too did the agency agreements. Perhaps by reason of the manner in which the agreements were prepared, by and large, the documents suffered from significant imperfections. First agency agreement 1. In April 2015, the agent and C88 entered into a Deed of Exclusive Agency in respect of the Carlingford development for a term of four months. The agreement was drafted by Clarke Kann Lawyers. Annexed to the agreement was a schedule listing the apartments in the North, South, East and West buildings which were entrusted to the agent for sale. For each apartment, the schedule specified a price, being a Minimum Unit Price (MUP). The agent was entitled to a Selling Fee equal to the purchase price of the apartment less the MUP: clauses 8.1, 8.3. In short, to the extent that the agent sold an apartment above the specified price, the agent kept the rest as commission. 2. If the deposit was 10% of the purchase price, then C88 was obliged to pay commission by a first instalment of $5,000 within 14 days of payment of the deposit and the balance on completion of the contract: clause 8.4. Clause 8.5 provided: 8.5 Payment to Mortgagee (a) The Agent acknowledges that: (i) until the mortgage ("Mortgagee") of the Properties has been paid in full, all proceeds of settlement of the Properties must be paid to the Mortgagee less the costs of the sale, as agreed by the Mortgagee, and (ii) the Mortgagee may not allow an amount above 12% of the Selling Fee to be paid out from the proceeds of settlement. (b) Despite clause 8.4(a)(ii) [which obliged C88 to pay the balance of commission on completion of the contract], if clause (a)(ii) applies, the Principal may extend the due date for payment of the Selling Fee by a further 30 days. 1. That is, the agent's entitlement to payment of the balance of commission on completion of the sale of the apartment was not absolute but, where the commission was more than 12% of the sale price, may be delayed due to the exigencies of the secured lender. Second agency agreement 1. In May 2015, the agent and C88 entered into another Exclusive Agency Agreement in respect of the Carlingford development. Mr Wang said the second agreement replaced the first agreement. Certainly, the second document is quite different to the first and appears to have been prepared from Mr Cheung's template. That is, after one month, the agent and C88 'ditched' the agency agreement prepared by Clarke Kann Lawyers in favour of the agent's standard wording. 2. Under the second agency agreement, C88 granted the agent exclusive agency on the sale of Agency Lots in the development for the Duration. "Agency Lots" meant the residential units listed in the "Agency Lot Schedule", being the schedule attached to the agreement listing the Agency Lots and their respective MUP: clause 4.1, clause 1.1(d) and (e). A schedule was attached being, as far as I can see, the same schedule as had been attached to the first agency agreement. As to Duration, the exclusive agency period now continued until 30 business days after the later of C88 providing the agent with the registered strata plan or the occupation certificate for the development: clause 7.1. C88 warranted that it would pay the agent commission in accordance with the agreement: clause 4.1(g). 3. Commission under the second agency agreement was now payable using a formula: Contract Price x MUP. Presumably, the multiplication sign was intended to be a subtraction sign, in which case the agent's commission continued to be the excess of the selling price over the MUP. Again, the first instalment of the commission was $5,000 payable within 14 days of exchange of contracts for sale: clause 8.2(a). The balance of commission was "due and payable" on completion of the contract for sale. However, clause 8.2(e) again provided: Notwithstanding the foregoing (b) [making the balance of commission "due and payable" on completion] … where the Commission Entitlement for the Agency Lot concerned exceeds an amount equating to more that 12% of the Contract Price of the Agency Lot concerned, where required by the Owner's mortgagee, the Owner has the right to delay payment of such amount of the Commission that exceeds 12% of the Contract Price and make payment upon repayment of moneys owed to the Owner's mortgagee. 1. Again, the agent's right to payment of the balance of its commission on completion was deferred to C88's obligation to its lender where the agent's commission was more than 12% of the sale price. Unlike the first agency agreement, C88 could now delay payment of the balance of the commission until "repayment of moneys owed to the Owner's mortgagee". As I read it, in these circumstances, the balance of the commission was no longer "due and payable". The agent was, however, entitled to interest at 10% per annum: clause 8.10. 2. In addition, the second agency agreement now provided that the agent was entitled to take an apartment in lieu of accumulated or accrued commission. Clause 8.11 provided: Further Right of the Agent in Respect of Accumulated or Accrued Commission Entitlement 8.11 The agent has the right from time to time, to: … (b) nominate any party, including itself or any person to acquire any Agency Lot, which is not subject of exchanged contracts, as stock for re-sell in the future. Such nomination may be on more than one occasion, and where the Agent makes such nomination the Owner must sell to the nominated party (including the Agent itself) and the price of the Agency Lot concerned shall be the MUP for the Agency Lot concerned at the time [the agent] makes the nomination. 1. In that event, C88 agreed that the sale price was the MUP for the Agency Lot concerned, no deposit was payable and the agent "shall be absolutely entitled to apply set off against the commission due and payable": clause 8.12(a)-(b). Further, C88 was obliged at its own cost to do all things necessary to transfer unencumbered title in the Agency Lot to the agent or its nominee: clause 8.12(d). 2. The ability of the agent to take an apartment in lieu of unpaid commission may be thought to have provided the agent with a useful option, particularly where by reason of clause 8.2(e) the agent might be waiting for some time to receive the balance of commission payable on completion of sale of an apartment. That said, the practicalities of this option are not obvious where, presumably, the Owner's mortgagee may be equally likely to require the proceeds of sale of all apartments be paid in reduction of secured debt. In any event, the second agency agreement gave the agent three options in respect of unpaid commission: where the commission was "due and payable", the agent could pursue the usual avenues of debt recovery; the agent could await payment with interest; or the agent could take an apartment in lieu. Negotiation of further agreement 1. On 2 March 2018, the strata plan for Stage 1 of the Carlingford development was registered, comprising 45 lots with a street address on James Street, Carlingford. 2. Mr Wang said, in about March 2018, the South, East and West buildings of The Somerset were nearly ready for settlement when he received a call from each of Mr Fayad and Mrs Khattar, asking for help in like terms. Mr Wang recalled his conversation with Mr Fayad as follows: Fayad: Brother, I need your help, at settlement our funder only allowed you to deduct 3.3% of contract price from the deposit you hold. The balance is required to be provided at settlement for payment to our funder. Wang: No, I can't agree with this. This is only opportunity for PIA to get our full commission for the sale. Fayad: Brother, we have problem with our cash flow. If you do not agree with this the settlement will not happen. Then you, we and your buyers will all be in trouble. Wang: How will PIA commission be protected? Fayad: North Building will be settled next year. You can keep all deposit for North building for outstanding commission when North building starts settle. Wang: If the deposits are not enough to pay all balance of commission I need put caveat on your remaining units. Fayad: It is ok, but please make sure your caveat will not affect our sale and settlement. 1. Mr Wang's recollection of the conversation is not easy to follow where, as I understand it, each of the South, East, West and North buildings comprised a different strata plan and where the strata plan for Stage 1 was registered in March 2018, Stage 2 in April 2018, Stage 3 in August 2018 and Stage 4 (presumably the North building) in July 2019. It may be that Mr Wang's recollection of when this conversation took place is incorrect, or he may have coalesced a number of conversations. In any event, Mr Wang said that, considering the bigger picture and a continuing relationship with Dyldam, he agreed to this proposal. As a consequence, when completing the sale of apartments in the East, West and South buildings, the agent received only 3.3% of the contract price in part-payment of its commission. 2. On 11 April 2018, the strata plan for Stage 2 of the Carlingford development was registered, comprising 107 apartments with a street address on Jenkins Road, Carlingford. By now, the agent was also owed commission by Dyldam in respect of several other developments. Mr Wang spoke to Mr Fayad more than once concerning the delay in payment, and Mr Fayad said, "If you can settle sold units and sell [a] few more units, we will pay you all outstanding commission, otherwise PIA, we and your clients are all in trouble. You will be fully paid when North building settles." 3. After some discussion, Mr Wang and Mr Fayad agreed to change the commission rate to 5.5% for further sales in The Somerset, and on a sole agency basis rather than an exclusive agency basis. Mr Wang requested a personal guarantee from Mr Fayad and Mr Khattar in respect of unpaid commissions and outstanding interest, which Mr Fayad declined. As Mr Wang recalled it, he and Mr Fayad then had a conversation as follows: Wang: I need some security for the significant amounts owing to PIA in Somerset. Fayad: What security do you want? Wang: I need add caveat clause in our agency agreement. I will send you the agency agreement on terms like the replacement agency agreement of 2015, but changing to sole agency agreement, commission rate at 5% plus GST and caveat provisions to protect PIA. Fayad: OK. My office will send you the list of the further units. Put them in your sole agency agreement and send to me. We can discuss further afterwards. 1. It is not entirely clear whether Mr Fayad's "OK" voiced agreement to Mr Wang's requests or simply acknowledged the changes which Mr Wang wished to make to the agency agreement. The fact that Mr Fayad then proposed that his office would send a list of further units and Mr Wang would provide the proposed agreement and "We can discuss further afterwards", combined with Mr Fayad's apparent reluctance to commit to anything definite, favours the latter. I do not accept the agent's submission that regarding Mr Fayad's "OK" as equivocal is "perverse". The fact that Mr Wang and Mr Fayad continued to negotiate the inclusion of the caveat clauses when next they spoke confirms the conclusion I have reached: see [36]. 2. Mr Wang received a further list of 34 apartments. This became the Agency Lot Schedule to the new agency agreement; the schedule was checked by Mr Wang's staff. Mr Wang agreed that the Agency Lot Schedule was an important document, "it's important … then we know which one we can sell, yes." 3. Mr Wang agreed that, although he had only discussed making three changes to the agency agreement with Mr Fayad, a lot of changes were made to the Sole Agency Agreement, "Yeah, I think my staff take this opportunity to amend it." Mr Wang took the opportunity to negotiate new clauses which he considered improved the document and were better for the agent. Mr Wang sent Mr Fayad a Sole Agency Agreement, which included the 34 additional units in the Agency Lot Schedule, caveat clauses, an increase in the agent's commission, an extension of the agency period and a variety of amendments, apparently as a consequence of using a more recent template. 4. C88 had solicitors in relation to the agency agreement for the Carlingford development. Mr Wang said he sent the agreement to Mr Fayad's "legal or [his] manager [who] look after the agency" rather than to Mr Fayad directly, "Of course eventually [the document] got around to Sam Fayad." By providing the document to Mr Fayad, Mr Wang understood that he was presenting the deal which he wanted to do with Mr Fayad. After the document was passed onto Mr Fayad, Mr Wang said there would be further discussion. 5. Mr Wang and Mr Fayad spoke again as follows: Wang: It is changed to sole agency and not exclusive. The interest provision remains the same. There is no personal guarantee, and the added part is the security provisions in clauses 12.9, 12.10 and 12.11 to safeguard the commission and interest which C88 has failed to pay for the sales and further sales and the extension of the agency period and payment of the first instalment of the commission. Fayad: Can you leave out the caveat part? Wang: No, the caveat part is necessary and important. If PIA is not paid upon completion of contracts of the sold agency lots since 2015 or any further sales PIA will lodge. Fayad: Okay, but can you agree not to lodge caveats until the remaining stages have completed and the strata plans registered, and PIA has still not receive payment for settlement of the sold lots? Wang: Okay. 1. In this conversation, Mr Fayad's agreement to the lodgement of caveats is plain, albeit there was also an oral agreement not to lodge caveats until a particular point in time and only in certain circumstances: the agent was not to lodge caveats until all strata plans had been registered and only then if the agent was still owed commission. 2. By now the agent was owed unpaid commissions of $3,203,862. (C88 did not plead to this allegation in its Commercial List Response, which the agent correctly treated as an admission: Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd [2008] NSWCA 39 at [62]-[63].) The agent had also introduced purchasers to exchange unconditional contracts for the purchase of 295 off-the-plan apartments, such that further, substantial commissions were in view. Third agency agreement 1. On 20 April 2018, the agent and C88 executed the Sole Agency Agreement. The agreement is broadly similar to the second agency agreement. C88 granted the agent a sole agency on the sale of the Agency Lots for the Duration: clause 8.3. As to Duration, the agreement now terminated 90 business days after the later of C88 providing the agent with the registered strata plan or the occupation certificate: clause 11.1. 2. C88 again warranted that it would pay the agent commission in accordance with the agreement: clause 8.1(h). In addition, clause 8.2 provided "Where there is evidence of a breach of the Owner's warranty in [specified] clauses …, the agent reserves the right to pursue damages." The specified clauses did not, however, include the warranty in clause 8.1(h). 3. Clause 12 now dealt with commission. Commission was payable at 5.5% of the contract price, with a first payment of $7,700 within ten business days of exchange and the balance "due and payable" on completion: clauses 12.1, 12.2. The sub-clause concerning non-payment of the balance of commission above 12% of the sale price no longer appears. The deletion of this sub-clause was not the subject of discussion between Mr Wang and Mr Fayad but made sense where the agent's commission under the Sole Agency Agreement was now limited to 5.5% of the contract price. 4. The agreement now included the following new clauses: (emphasis added) 12.9 The Owner agrees that the Agent may lodge and maintain caveat or caveats on any units in the Development, the title of which has not been transferred to a third party, where the Owner is in default of its obligations to make payment of Commission to the Agent. 12.10 The Owner acknowledges that the caveat provision gives an absolute right to the Agent to protect the Agent's interest to commission entitlement or compensation or damages as the case may be. 12.11 Where the right of the Agent to lodge and maintain caveat or caveats arise, the Owner is taken to have and is deemed to have duly given consent to the Agent to the lodgment or lodgments and maintaining of caveats and the Agent is only obligated to remove the caveat or caveats on full receipt of its Commission entitlements and this clause shall provide a full and complete defen[c]e to any action of the Owner to seek removal of the caveat or caveats. 1. Any entitlement to lodge a caveat was expressed to be referable to C88's default in its obligation to pay Commission, where Commission was defined in clause 1.1(g): (emphasis added) "Commission" or "commission entitlement" or "agent commission" means the commission plus interest for any late payment of the commission in accordance with this Agreement, which the Owner has agreed to pay to the Agent for the sale of each Agency Lot. The italicised text is the only substantive difference in the definition of Commission from the second agency agreement. 1. Agency Lot was defined in clause 1.1(d) in identical terms to the definition in the second agency agreement: (emphasis in original) "Agency Lots" mean only the residential units (whether described as apartments, units or lots) listed in the Agency Lot Schedule. 1. "Agency Lot Schedule" was now defined (in relevantly the same terms as in the second agency agreement) as "the Agency Lot Schedule attached this Agreement listing the Agency Lots and their respective MSP: clause 1.1(e). "MSP" meant the Minimum Selling Price recorded in the MSP column in the Agency Lot Schedule: clause 1.1(u). 2. The Agency Lot Schedule to the Sole Agency Agreement listed the 34 apartments mentioned in the conversation between Mr Wang and Mr Fayad described at [31], and did not include the apartments which the agent had already sold and for which commission remained unpaid. As such, the caveat provisions applied to protect the agent's commission on the 34 apartments only (being commission of some $641,000) rather than all unpaid commission (being some $18 million). 3. C88 remained obliged to pay interest at 10% per annum on any unpaid commission: clause 12.14. The agent continued to enjoy a right to take apartments in lieu of unpaid commission, the only substantive difference in the clause being to change the reference from MUP to MSP. More precisely: (amendments marked) Further Right of the Agent in Respect of Accumulated or Accrued Commission Entitlement 12.15 The Agent has the right from time to time, to: (a) direct the Owner to pay accrued commission which is due and payable to the Agent, in whole or in part to any third party as the Agent may direct; or (b) Nominate any party, including itself or any person to acquire any Agency Lot, which is not subject of exchanged contracts, as stock for re-sell in the future. Such nomination may be on more than one occasion, and where the Agent makes such nomination the Owner must sell to the nominated party (including the Agent itself) and the price of the Agency Lot concerned shall be the MSP for the Agency Lot concerned at the time PIA makes the nomination. 12.16 For the contracts on the sale of any Agency Lot to the Agent or the party nominated by the Agent, the Owner agrees: (a) the sale price (inclusive of GST) is the MSP for the Agency Lot concerned; (b) notwithstanding any other provision in this Agreement, no deposit is payable and the Agent shall be absolutely entitled to apply set off against the Commission due and payable by the Owner to the Agent for not just towards the deposit but also the and balance of moneys payable at completion against commission payable to the Agent of contracts for the or each Agency Lot concerned; (c) completion to be not longer than 6 weeks from the date of exchange; and (d) the Owner at the Owner's own cost must do all things and sign all documents to transfer unencumbered title to the Agency Lot concerned to the Agent or its nominee as the case may be. 12.17 The Agent agrees that the Owner is not required to pay commission or make any additional payment of commission to the Agent on the sale or Transfer of Agency Lot(s) to the Agent or its nominees, in respect of the Agent's right to acquire for itself or by its nominee Agency Lot(s) against set-off of Commission due and payable to the Agent. Again, the agent's right to take an apartment in lieu of unpaid commission was available in respect of an Agency Lot which, under the Sole Agency Agreement, were the 34 apartments only. 1. Clause 17 concerned what should happen where the Agency Period ended before all Agency Lots were sold. In particular, clause 17.3 provided for an indemnity by C88: The Owner must indemnify and keep the Agent indemnified for the Agent's Commission Entitlements and any damage or loss or legal costs and GST which the Agent may incur or suffer in or relating to the lodgment and defense of the Agent's right to maintain caveats under or pursuant to this Agreement. The accrued rights of the Agent, including the right of the Agent to lodge and maintain caveats and the indemnity in this clause shall not in any way be minimized, affected or prejudiced from or because of termination of this Agreement. The clause did not expand the agent's right to lodge a caveat beyond clause 12.9 to 12.11 and, again, C88's indemnity in respect of the commission arose in respect of the sale of each Agency Lot, being the 34 apartments only. 1. In addition, the agreement contained an 'entire agreement' clause in the same terms as the second agency agreement, being: 22 WHOLE AGREEMENT 22.1 The contents of this Agreement together with the Price List record the entire agreement between the parties. All representations, communications and prior agreements in relation to the subject matter of this Agreement are merged in and superseded by this Agreement. 22.2 No amendment of this Agreement is binding unless it is in writing and signed by both parties. 22.3 All understandings, agreements, warranties or representations (whether express or implied) are excluded other than those which are set out in this agreement. 1. For completeness, the agreement contained an interpretation clause, as had the second agency agreement, which provided: 1. Headings are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise: … (h) Where any term or provision in this Agreement is at any time repugnant or contrary to any law, it shall where possible be read, interpreted, and construed beneficially to and for the benefit of the Agent so as not to be repugnant or contrary to law and where this is not possible, the term or provision shall be deemed to be excised and not form part of the Agreement and not to cause the Agreement or any part to be invalid. Supplementary agency agreements 1. On 27 June 2018, a Supplementary Agency Agreement was executed by the agent and C88, providing for bonus incentives to be paid to the sales agent. In August 2018, the strata plan for Stage 3 of the Carlingford development was registered, comprising 129 apartments with a street address on Thallon Street, Carlingford. 2. In October 2018, C88 and the agent entered into a second Supplementary Agency Agreement, providing a sales incentive of 2.2% of the contract price (including GST) to be rewarded to the Sales Consultant. In addition, the agent's commission was adjusted to 4.4% (including GST), to be paid on settlement. In February 2019, the agent and C88 entered into a third Supplementary Agency Agreement, adding additional Agency Lots to the same promotion, being 2.2% of the contract price as a sales incentive to the Sales Consultant and commission to the agent adjusted to 4.4%. 3. In July 2019, Stage 4 of the Carlingford development was completed with registration of the strata plan, comprising 148 lots with a street address also on Thallon Street, Carlingford. On 12 August 2019, the agent and C88 entered into a fourth Supplementary Agency Agreement, expressed to supersede all previous Supplementary Agreements and "shall be deemed to supplement" the Sole Agency Agreement: recital B. A sales incentive of $10,000 was to be rewarded to the Sales Consultant. Clause 3.3 was entitled "Amendments to the Agreement and the Agency Lot Schedule", where Agreement was defined as the Sole Agency Agreement. Clause 3.3(b) provided: The Owner would like to include additional Agency Lots in the Agency Lot Schedule for the Agent to market and promote which are the Agency Lots that are marked additional under the Vendor Status of the Agency Lot Schedule below … 1. An Agency Lot Schedule followed, in which 67 units were marked "Additional" in the Vendor Status column. By these means, the Agency Lot Schedule to the Sole Agency Agreement was amended by the addition of these 67 units. In addition, clause 3.3(c) provided that the MSP was revised as listed in the Agency Lot Schedule in the fourth Supplementary Agency Agreement. Caveats lodged 1. Mr Wang says that, in about August 2019, the North building was ready to settle. However, Mr Fayad informed Mr Wang that he could not keep the full deposit but only 3.3% of the contract price. Mr Wang spoke to Mr Fayad more than once, and to Mrs Khattar to similar effect, as follows: Wang: Hi Sam, you agreed that I can hold all deposit for North building for commissions including for paying part of outstanding commission east, south and west building. Fayad: Brother, I am sorry for this. We have not enough money to pay funder, GST etc. You can keep 3.3% of contract prices, please release the balance. Please agree with this for some settlement and enable us to pay some cost. Then you can keep 5.5%. Wang: I have concern that you keep breaking your promise. With normal practice your funder should allow you keep amount for paying commissions and GSTs. Fayad: Brother. The problem is we never tell our funder how much we owe PIA. Wang: Same question, what is the security for PIA? Fayad: As what I said before, after paying off our funders we have a lot of profit left. I have some units without any mortgagee. Wang: Can I put caveat on those unit. Fayad: Yes. You can, not now, please don't disturb our funders and affect settlement. 1. Whilst the conditions which Mr Wang and Mr Fayad had agreed should be satisfied before the lodgment of caveats – registration of all strata plans and the agent still being owed commission – were now satisfied, Mr Wang continued to ask whether he could lodge caveats. This appears to have been by reason of commercial considerations. Mr Wang said that Mr Fayad continued to strongly suggest that the agent not lodge a caveat too early "to disturb his funder because it's not good for their name" and may affect sales "so he always come to me, brother, don't put a caveat now, don't put a caveat now, okay, and this why later on they agree to put caveat for unencumbered property which many have no financier. This why I ask … can I put it now, okay, are you happy because of our relationship, we got more than 10 years working together." 2. Mr Wang became increasingly concerned about the delay in payment of commission. He spoke to Mr Fayad, Mr and Mrs Khattar, and the property finance officer of Dyldam, George Papanikolaou, to chase up payment. On 24 July 2020, Mr Wang attended at Dyldam's office and met with Mr and Mrs Khattar, Mr Papanikolaou and Mr Fayad's son-in-law, Charbel Bounmelhem. Mr Wang and Mr Khattar exchanged words as follows: Khattar: … please help us to pay off our mortgage. But not all units have mortgage. Do you like to take those units as payment as what you used to do. Wang: I prefer payment. But if you want me to take units in place of payments, I need to know which units, the pricing, the additional payment for the stamp duty which I will have to bear to take over. Khattar: No problem. George will liaise with [the agent's Operations Manager] on the units, pricing etc. and we can work out from there. Wang: Time is dragging on. I cannot delay putting on the caveats. I will put on caveats on all lots which have not been sold. Khattar: Baka. You do not need to put caveats on all unsold lots. I will get George to discuss further on the lots that you can place caveats on. Mr Wang understood "baka" to be Japanese for idiot. 1. On Tuesday, 19 August 2020, Mr Wang emailed those with whom he had been speaking at Dyldam, "I try to be nice and patient", but having received no feedback from the vendor, he proposed to lodge caveats "today and lodge court case next week. I felt you have no intention to pay but just delay." Mr Fayad replied, asked Mr Wang to give them "till Friday to come back to you", to which Mr Wang replied, "I have to put caveats first. I have no confidence in any other way." Mr Papanikolaou replied, "I'm sitting down with [Mr and Mrs Khattar] this week … and by Friday should revert back to you with a solution." 2. In August 2020, Mr Wang said that he spoke to Mr Fayad again as follows: Wang: You had asked me to put off putting on PIA's caveats. You keep on saying PIA will be paid. The news in the press concerning ATO having issues with Dyldam, PIA not receiving payment in … sales of other developments are causing me great concern. It is not that I do not trust you, Joe and others, but I cannot put off and I will instruct my solicitor to lodge caveats on unsold lots. Fayad: Please do not lodge caveats on all unsold lots. Do not lodge caveats on lots where there is already a mortgage. It will only make things more difficult with lenders if PIA put caveat on mortgage lots. 1. On 27 August 2020, presumably after Dyldam had put forward its "solution" to Mr Wang, Mr Wang emailed Mr Papanikolaou, "Can you send me the list of all available units in Somerset. and please mark which units without loan." (Mr Wang explained that the list of units was for the purpose of lodging a caveat, being apartments with no mortgage so as to "try to not disturb the mortgage, the funder for the project.") On 31 August 2020, Mr Wang emailed Mr Papanikolaou again, "[I] am still wait your list of available units in Somerset." 2. On 9 September 2020, the agent sent a "Statement of Claim" under section 36 of the Property and Stock Agents Act to C88, claiming unpaid commission of $18,055,076. On 18 September 2020, the agent lodged caveats on 74 unsold lots in "The Somerset", although Mr Wang explained that the agent did not place caveats on all unsold lots. The caveatable interest was described as: Equitable charge express or implied, from express right in cl 12.9, 12.10 & 12.11 of agreement signed @ 20/04/2018 between Caveator & Caveatee to lodge & maintain caveat or caveats on land which has not been transferred to third party where Caveatee is in default until such time Caveator is paid. 1. C88 did not challenge the caveats. However, in mid October 2020, Mr Fayad contacted Mr Wang and requested the removal of caveats as follows: Fayad: There are settlements coming up end of the month. Please ask your solicitor to withdraw when the request comes from our conveyancer. Wang: Dyldam must pay my legal costs and fees for the withdrawal. Also the net proceeds of the sale should be paid to PIA to reduce the outstanding payments. Fayad: Will pay the fees and costs. Please take only the commission for the sale of the lot which is settling. You will be paid, there is no need to worry as you have so many lots caveated and they are worth much more than what is owed to you. I will continue to get your PIA to work on other developments. 1. Mrs Khattar also called Mr Wang, and they had a conversation as follows: Mrs Khattar: Hi Justin, I need your help. Because of our funders we only can pay your 5.5% of contract prices at each settlement. Please release the balance of deposit. Otherwise we have no money to settle. Wang: To help you, I will be ok only deduct the 5.5%, but make sure you will pay us the outstanding commission. Mrs Khattar: No worry, we have plenty of profit left after paying our funders. 1. Mr Wang agreed to withdraw the caveats, with C88 paying the associated fees and legal costs on completion of the contract for the lot concerned. In this manner, from 26 October 2020 to 17 September 2021, the agent removed caveats lodged on 46 of the 74 lots as the lots were sold by C88 through the agent. C88 paid the commission to the agent in respect of each of the 46 lots but Mr Wang did not insist upon payment of the net proceeds of sale of these apartments to reduce the outstanding commission then owed. These proceedings 1. On 25 January 2021, the agent commenced these proceedings. On 22 March 2021, Hammerschlag J afforded C88 further time to file its Commercial List Response by 23 April 2021. On 30 April 2021, Hammerschlag J extended time for C88 to file its Commercial List Response to 7 May 2021, granting leave to the agent to file an application for judgment if the pleading was not filed. No Commercial List Response was filed and, on 10 May 2021, the agent filed a motion seeking summary judgment. Directions made in respect of the motion were extended and stood over from time to time, at the request of the parties. Throughout this period, the agent continued to progressively withdraw its caveat over lots in The Somerset, presumably on completion of the sale of the apartment and payment of the agent's commission in respect of each apartment. 2. On 13 September 2021, Hammerschlag J heard the motion for summary judgment. His Honour observed that, although C88 had filed no defence "in breach of directions", it appeared that the hearing of the motion. C88's solicitor informed the Court that the parties had reached an advanced stage in settlement negotiations, maintained that there was agreement in principle on major terms and enquired whether the Court would consider ordering the parties to mediation: The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd [2021] NSWSC 1175 at [10]. The agent did not embrace this suggestion and proceeded on its motion. Hammerschlag J gave judgment in favour of the agent against C88 for $18,055,076.20 together with interest. On 8 November 2021, the agent issued a statutory demand to C88 for the judgment sum plus interest and, on 25 November 2021, C88 filed an originating process seeking to set aside the statutory demand under section 459G of the Corporations Act 2001 (Cth): In the matter of C88 Project Pty Ltd [2022] NSWSC 126 at [1] (per Williams J). 3. On 9 December 2021, C88 filed a Commercial List Response, albeit the pleading was not particularly responsive. As to the agent's contention that it was entitled to an equitable charge, C88 disclaimed that the Sole Agency Agreement gave rise to such a charge, noting that a contractual entitlement to lodge a caveat does not by implication convey an intention to grant an equitable charge, citing Ta Lee at [97]-[98], [104]. As to the rectification suit, C88 relied on the entire agreement clause (clause 22) and denied any common intention that the agent would be entitled to lodge a caveat to secure pre-Sole Agency Agreement commission. 4. Also on 9 December 2021, Ball J made directions for the filing of evidence, including by the defendants on 25 February 2022. On 31 January 2022, this timetable was extended by Hammerschlag J, including for the defendants to file and serve any evidence by 28 March 2022. On 17 February 2022, Williams J dismissed C88's application to set aside the agent's statutory demand: In the matter of C88 Project Pty Ltd. On 25 March 2022, C88's solicitor filed a notice of ceasing to act. On 8 April 2022, Ball J fixed the remaining matters for final hearing on 23 June 2022. On 14 April 2022, administrators were appointed to C88. On 31 May 2022, C88 went into liquidation. The agent obtained leave under section 500(2) of the Corporations Act to proceed against C88. 5. As at the final hearing, the agent had not received any payment towards the judgment sum but maintained caveats over 27 apartments in The Somerset of which five were "Additional" Agency Lots the subject of the fourth Supplementary Agency Agreement. Mr Davis had valued the 24 of these caveated apartments; C88 did not permit access to the remaining apartments. RECTIFICATION 1. Before construing the Sole Agency Agreement and determining whether it gives rise to an equitable charge, it is necessary to ascertain precisely what the terms of the agreement are, where the agent also seeks rectification of its terms. 2. The agent sought rectification on the basis of a mutual mistake in the drafting of clauses 12.9, 12.10 and 12.11 of the Sole Agency Agreement. It was said to be the common intention of the parties that the protection afforded by these clauses would extend to commissions payable to the agent for effecting the sale of properties in The Somerset prior to 20 April 2018. The agent sought rectification of the Sole Agency Agreement to amend the definition of Commission as follows: (changes indicated) "Commission" or "commission entitlement" or "agent commission" means the commission plus interest for any late payment of the commission in accordance with this Agreement, which the Owner has agreed to pay to that is agreed between the Owner and the Agent for the sale of each Agency Lot, and for any lot in the Development which the Agent has already caused the sale of for the benefit of the Owner prior to the date of this Sole Agency Agreement. I assume that the deletion of the entitlement to interest in an error on the agent's part. 1. There is no dispute as to the principles. As Gageler, Nettle and Gordon JJ explained in Simic v New South Wales Land and Housing Corp (2016) 260 CLR 85; [2016] HCA 47 at [103]-[104]: 103 Rectification is an equitable remedy, the purpose of which is to make a written instrument "conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately". For relief by rectification, it must be demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an "agreement" between the parties in the sense that the parties had a "common intention", and that the written instrument was to conform to that agreement. Critically, it must also be demonstrated that the written instrument does not reflect the "agreement" because of a common mistake. Unless those elements are established, the "hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties" cannot be displaced. 104 The issue may be approached by asking — what was the actual or true common intention of the parties? There is no requirement for communication of that common intention by express statement, but it must at least be the parties' actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party. 1. Rectification may be available where a common mistake is as to the legal effect of the words used, rather than as to the actual words used: Bush v National Australia Bank (1992) 35 NSWLR 390 at 406 (per Hodgson J). 2. As to proof of actual intention, the Court views the evidence of actual or subjective intention "objectively, in the sense that it does not merely accept what a party says was in his or her mind, but instead considers and weighs admissible evidence probative of intention. … [P]roof to the necessary standard will usually require some manifestation of the intention of each party by their words or conduct and that the requisite common intention will be a matter of inference for the court from that evidence": Simic at [42]-[43] (per Kiefel J). Where a corporation is involved, the primary consideration in determining the intention of the corporation is the state of mind of the person who acted: Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280 at [89], referring to Johns v Australian Securities Commission (No 2) (1992) 35 FCR 146 at 172 (per Black CJ and Von Doussa J); Arthur Yates & Company Pty Ltd v Vegetable Seeds Committee (1945) 72 CLR 37 at 69 (per Latham CJ), 76 (per Starke J) and 82 (per Dixon J). 3. The onus on the party seeking rectification is a heavy one: Newey v Westpac Banking Corporation [2014] NSWCA 319 at [170] (per Gleeson JA). The agent accepted that it was necessary to establish "in the clearest and most satisfactory manner" or by "clear and convincing proof" that, at the time it entered into the Sole Agency Agreement, the parties had a common intention concerning their agreement which is not reflected in the written contract: Australian Gypsum Ltd & Australian Plaster Co Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 64 (per Rich, Starke and Dixon JJ); Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 349 (per Mason J); Igloo Homes (per Ipp JA, with whom Santow JA agreed). Submissions 1. The agent submitted that the conversations between Mr Wang and Mr Fayad made clear that the intention of both was that the agent should be secured in respect of commissions earned by past sales; this was the whole point of the agent's request to be able to lodge a caveat. Mr Wang's evidence as to the terms of his conversations with Mr Fayad stood as evidence of C88's intention at the time and was unchallenged. There was no evidence to indicate a change in C88's intention since. The context in which these discussions took place was that the agent was already owed a lot of money and was asked to forebear on requiring payment of outstanding commission as and when it fell due on completion of these sales. The agent submitted that the Court should infer that Mr Fayad's evidence, if given, would not have assisted C88. For reasons earlier given, I decline to draw such an inference but note that Mr Wang's evidence was unchallenged and I found him to be a credible witness. 2. The liquidator submitted that the evidence did not support a finding that C88 and the agent had a common intention that the agent would be entitled to lodge a caveat to secure the payment of all commissions owing to it by C88 for sales made prior to 20 April 2018. Further, the proposed rectification of the contract would result in an outcome other than what was specifically discussed. As rectified, the agent would have a right to lodge caveats immediately from the date of the Sole Agency Agreement, as C88 was then in default of its obligations to make payment of earlier commissions; this was plainly not what the parties intended. To this, the agent submitted in reply that it did not oppose such a condition being imposed on the rectified document, although nothing turned on this as the conditions had since been satisfied. Conclusion 1. Accepting Mr Wang's evidence as to the terms of the conversations with Mr Fayad, the words indicate the intention of each party. The Court may also have regard to the parties' conduct and draw inferences in order to ascertain the actual intentions of both parties: Simic at [42]-[43] per Kiefel J. 2. The conversations between Mr Wang and Mr Fayad reveal a range of proposals to pay the agent's outstanding commission. First, as described at [28], the deal was that the agent would not receive all of its commission in respect of the sale of apartments in Stage 1, Stage 2 and Stage 3 on completion of the sale of those apartments but would receive any unpaid commissions from the deposits on apartments in Stage 4. It is not entirely clear whether Mr Fayad's agreement, at the time, to the lodgment of caveats depended upon it becoming clear that the deposits for Stage 4 would not be enough to pay unpaid commission from Stage 1, Stage 2 and Stage 3. In any event, Mr Fayad's consent to the lodgment of caveats appears to have been qualified: "please make sure your caveat will not affect our sale and settlement." 3. Next, in discussions between Mr Wang and Mr Fayad concerning commission owed by Dyldam in respect of several developments, described at [30], Mr Fayad said that the agent would be "fully paid when North building settles". It is unclear whether Mr Fayad had in mind that the agent would be paid all outstanding commissions in respect of The Somerset when the North building sold, or whether this means of payment extended to commissions owing to the agent in respect of other developments. 4. Mr Wang and Mr Fayad then re-negotiated the terms of the agency agreement in respect of The Somerset. Mr Wang said he needed "some security for the significant amounts owing to PIA in Somerset." When asked what security he wanted, Mr Wang said he wished to add caveat clauses to the agency agreement, and did so. Where it was the agent seeking "security", it is reasonable to think that Mr Fayad awaited the draft Sole Agency Agreement to see the precise detail of the security sought before considering whether the form of security was acceptable to C88. 5. As to preparation of the caveat clauses, Mr Wang could not recall whether he drafted the Sole Agency Agreement or whether one of his staff did so on his instructions. (Certainly, Mr Cheung was not involved in preparing the document.) In particular, adding caveat clauses was not the sort of thing Mr Wang would have asked Mr Cheung to help with; Mr Cheung would assist "for something we not very confident – this one very straightforward". Nor is it clear whether Mr Wang specifically reviewed the caveat clauses before the Sole Agency Agreement was sent to C88. Mr Wang said that he looked at the caveat clauses, "Yes, we pay attention, yes." He later said, "I cannot say I read. Definitely I will … ask my staff where is the caveat clause … for the commission." Mr Wang also said, "I think like even I read it is probably I have confidence we are protected for my English and for my understanding." Finally: We definitely remember this agreement before we send out contained clause for caveat because that's most important for me to continue … the sale for the project and not take any step to claim, to ask for pay the outstanding commission, otherwise I cannot sell any more because it too big, because continue to say to me, brother, don't worry … we got plenty property left after to pay off the bank. You no worry, you can put a caveat, you got right to buy the property, you know, as crew [security?]. This what give me confidence to continue the sale. 1. As to the 'entire agreement' clause, Mr Wang said, "I probably did not read each of them." The clauses were part of the template, "So I believe those clause will protect me, from my understanding… I believe that my staff … believe this is the right things." Further, "I believe most of the things [in the template] is [to] protect us … And my staff probably got the same impression. I have no impression [that] I particularly paid attention for this clause when I prepare the sole agency agreement. … I [am] confident of this, this is all good for us." 2. It is also not clear whether the caveat clauses were straight from Mr Cheung's template or whether the template was amended. If sub-clauses 12.9 to 12.11 were taken straight from the template without further amendment, then, unsurprisingly, the caveat clauses in the template were not drafted to address the problem of arrears in commissions. If it had been intended to lodge caveats in respect of arrears in commissions, one might think it was obvious that amendments were needed to the template clauses. Of the points negotiated between Mr Wang and Mr Fayad, one might also think that the ability to lodge caveats in respect of past commission would have been a "main point" on which Mr Wang would have instructed his staff, if he did not prepare the document himself. Where unpaid commissions then exceeded $3 million, it may have been a matter on which Mr Cheung's assistance would be sought. As the Court has neither the template nor any notes or drafts, it is not possible to say precisely what happened, save that no attempt appears to have been made to draft such a clause. I infer that such documents, which may be expected to be in the possession of the agent in respect of the preparation of the Sole Agency Agreement would not have supported its claim. 3. On receipt of the proposed Sole Agency Agreement, either directly or via C88's solicitors, presumably C88 considered whether the caveat clauses were acceptable to C88. Whether the proposed caveat clauses were sufficient to protect the agent's interests as expressed by Mr Wang – "for the significant amounts owing to PIA in Somerset" – was hardly a matter on which C88 would have been expected to comment. 4. The high point of the agent's evidence in support of rectification is Mr Wang's conversation with Mr Fayad following circulation of the draft Sole Agency Agreement, described at [36]. Mr Wang then explained that clauses 12.9 to 12.11 were to safeguard the commission and interest which C88 had "failed to pay" together with commission and interest on further sales. Mr Fayad said nothing in response to this explanation; all Mr Fayad said was, "Can you leave out the caveat part?", which Mr Wang refused. 5. When signing the Sole Agency Agreement, Mr Wang understood and intended that the agent's entitlement under the Sole Agency Agreement to lodge caveats would include protection for the agent in relation to commissions which were then owing by C88 for properties which had already been sold by the agent. Mr Wang understood that, once he had a caveat, he did not need to worry, "my bigger concern is previous commission. This is a very big worry … both party we deal with whole project as one project … we all believe I can put the caveat in and to get my commission eventually from any unsold, any remaining property after pay of the mortgage. This my understanding when we prepare this one … That's also to give me confidence to continue the sale for the project." It was not until Mr Wang received advice from the agent's barrister, at about the time he swore his second affidavit in the proceedings on 9 June 2022, that he understood that the definition of "Commission" in the Sole Agency Agreement had the consequence that the caveats only secured commission in respect of the 34 lots rather than commission for the whole project, "But at the moment we sign this one … my staff probably they didn't know the difference. … but in my mind intention is I need caveat to protect my whole commission for the whole project." 6. Whilst I accept Mr Wang's evidence as to his intention and understanding at the time, the more difficult question is whether that intention was shared by Mr Fayad as, effectively, the intention of C88. Where C88's clear preference was that there be no caveat clauses at all, it is at least equally likely that C88 had no intention to enter into an agreement other than in the terms of the document proffered by the agent. Where the clauses of the Sole Agency Agreement were tolerably clear, the act of Mr Fayad signing the written document is consistent with a conclusion that he did not intend agree to anything further. 7. Also of interest, in Mr Wang and Mr Fayad's conversation in August 2019 described at [55], Mr Wang continued to hark back to the initial deal in March 2018: see [28]. Notwithstanding the addition of caveat clauses to the Sole Agency Agreement in the interim, Mr Wang was still asking, "Same question, what is the security for PIA?". If there was a common intention that a caveat lodged under the Sole Agency Agreement secured commissions payable prior to entry into that agreement, it would not have been necessary for Mr Wang to ask that question. 8. Overall, I am not persuaded to the relevant standard that the parties had a common intention that the caveat clauses in the Sole Agency Agreement entitled the agent to lodge caveats in respect of commission payable for apartments sold under the first or second agency agreements. Whilst I accept that Mr Wang intended to achieve this, the evidence that C88 also intended that the caveat clauses could be used in this manner falls short of "clear and convincing proof". As Sheller JA observed in Commissioner of Stamp Duties (NSW) v Carlenka (1995) 41 NSWLR 329, "The proved intention of the parties or party may be equivocal or too general or not sufficiently exact or precise to found relief': at 340. That is the case here. EQUITABLE CHARGE 1. The next question is whether the Sole Agency Agreement created an equitable charge. An equitable charge was succinctly explained by Giles JA in Cinema Plus Ltd v Australia and New Zealand Banking Group Ltd (2000) 49 NSWLR 513; [2000] NSWCA 195 at [144]: (emphasis added) A charge involves a proprietary interest held by way of security. It may arise in consequence of contractual rights, as in an equitable charge, but the objectively ascertained contractual intention must be to confer a proprietary interest as security for a present or future debt. 1. A more detailed explanation is given by Bathurst CJ (with whom Beazley JA and Tobias AJA agreed) in Roberts v Investwell Pty Ltd (in liq) [2012] NSWCA 134; (2012) 88 ACSR 689; what is necessary for an equitable charge is "that property of the chargor is appropriated to the chargee for payment of a debt and the chargee has a present right to have it made available for the payment of its debt. The availability of equitable remedies to enforce that right gives the chargee a proprietary interest by way of security in the property charged": at [26]. The Chief Justice, at [27], adopted Buckley LJ's explanation in Swiss Bank Corporation v Lloyd's Bank Limited [1982] AC 584 at 594: an equitable charge is "created when property is expressly or constructively made liable, or specially appropriated, to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is to say, by the appointment of a receiver or an order for sale": at 594. Further, Buckley LJ observed at 595: It follows that whether a particular transaction gives rise to an equitable charge of this nature must depend upon the intention of the parties ascertained from what they have done in the then existing circumstances. The intention may be expressed or it may be inferred. 1. The Chief Justice also adopted the description by Atkin LJ in National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 at 449-450: … where in a transaction for value both parties evince an intention that property, existing or future, shall be made available as security for the payment of a debt, and that the creditor shall have a present right to have it made available, there is a charge, even though the present legal right which is contemplated can only be enforced at some future date, and though the creditor gets no legal right of property … or any legal right to possession, but only gets a right to have the security made available by an order of the Court. 1. That is, as Bathurst CJ observed in Roberts v Investwell at [29], "there must be an intention to create an immediate proprietary interest or immediate right of recourse to identifiable, present, or in the case of a charge, future property." As such, an agreement to create a charge in favour of a creditor on request does not create an equitable charge as no immediate proprietary interest or right to recourse to a particular asset is conferred on the creditor: at [30]. At [31]: … The question depends, in my view, on the construction of the clause in question. If the provision on its true construction confers an immediate equitable interest in particular property, or grants an immediate right of recourse to present or future property, then the grantee will be secured to the extent of his or her interest in, or right to, the property. If it does not, the creditor will be unsecured. 1. In that case, Bathurst CJ concluded that the contract did not give rise to an equitable charge. The contract provided: The parties agree that if requested by [the lender] at any time [the borrower] must at its own expense immediately grant to [the lender] a mortgage over the Land, an equitable mortgage or charge over [the borrower's] assets and undertakings, and/or such other security as [the lender] may consider necessary. Any such securities must be in a form acceptable to [the lender's] legal advisers. 1. The obligation to grant the mortgage was expressed to be upon request. The proposed security was expressed as alternatives, the third alternative being security that the lender may consider necessary. The form of the security was not settled but was required to be in a form acceptable to the lender's legal advisers. Bathurst CJ held, "These matters taken cumulatively seem to me to lead to the conclusion that there was no intention to grant an immediate equitable interest of charge": at [32]. Right to lodge a caveat 1. Determining whether there is an equitable charge has caused some complexity where the charge is said to have been created by a registered proprietor's agreement to permit another to lodge a caveat over their property. An early consideration of this subject was in Murphy v Wright [1992] NSWCA 168; [1992] NSW ConvR 55-652; (1992) 5 BPR 11,734, where a deed of guarantee provided: (emphasis added) In the event of default by the Borrowers … then the Lender shall … be entitled to attach the debt due to any of the assets of the Guarantor or Guarantors whether such assets be real or personal and further the parties hereto agree that in the event of such default the Lender may register a caveat against any property registered in the name or any or all of the Guarantors until the Moneys Secured are repaid. 1. Handley JA (with whom Priestley JA agreed, Sheller JA dissenting) considered that the contractual right to lodge a caveat suggested that the lender was intended to have an equitable charge to support the caveat: at 5. Attaching a debt to property involved charging it with the debt: at 6. By lodging the caveat, the lender exercised its option to attach its subject to the property and created an equitable charge over the property: at 7. Of this conclusion, Bryson AJ later observed in Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489; [2011] NSWSC 1562 that the intention to create an equitable charge "must appear clearly" from the document; while the the clause in Murphy v Wright made a strong case for implication of an intention to create an equitable charge, "[the] implication was not made readily, and the difference of opinion shows the difficulties of the subject. The implication must exist in reality; it cannot be spun out of no more than reference to a caveat": at [50], [54]. 2. Less clear, in Troncone v Aliperti (1994) 6 BPR 97,455, a loan agreement provided: (emphasis added) The Debtor authorises the Creditors to lodge a Caveat on any property owned by the Debtors to protect his interests. 1. Mahoney JA (with whom Priestley and Meagher JJA agreed) observed at 13,292: It is a fundamental principle of construction that "Whoever grants a thing is deemed also to grant that without which the grant itself would be of no effect. … A caveat cannot be entered against land unless the caveator has the relevant proprietary interest in the land [being] "a legal or equitable estate or interest in the land" … Therefore, unless there be evident an intention to the contrary, the grant to the creditors of an authority to lodge a caveat on the relevant property carried with it by implication such an estate or interest in land as was necessary to enable the authority to be exercised. There was, in the present case, no intention to the contrary. … … it is not necessary to determine what is the precise nature of the interest in the land which, by this implied grant, was passed to the creditors. It is, in my opinion, sufficient to conclude that it was an interest which, within the Real Property Act 1900 would support the lodgement of the caveat. 1. The conclusion in Troncone v Aliperti was summarised by McLelland CJ in Eq in Coleman v Bone (1996) 9 BBR 16,235 at 16,239: … if in a contract between A and B, A grants B authority to lodge a caveat in respect of property of A, that grant carries with it by implication such estate or interest in the property as is necessary to enable that authority to be exercised. Where the authority to lodge a caveat is given in connection with an obligation by A to pay money to B, and there is no sufficient indication to the contrary, the implication is that the estate or interest granted is an equitable charge to secure payment to B of that money: Troncone at BPR 13,293–4; ConvR 60,020 per Meagher JA. 1. In Coleman v Bone, the lender had prepared a loan document, which stated: "About the $50,000 I shall want to put caveat on the property. … As the caveat will safe guard my investment, … I will not remove it unless you can (when you wish to sell) repay the $50,000 plus [various amounts]. Other than this reason I will not stand in your way when you wish to sell. If I wish repayment of my $50,000 … I shall give you 6 months' notice so you can arrange your finances or what ever." McLelland CJ in Eq held that the document supported the implication of an equitable charge to secure the repayment of money. 1. In Taleb, Bryson AJ disagreed with Coleman v Bone and observed that the decision of Court in Troncone v Aliperti "was not that there was a charge over the land, but there was an implied negative covenant to restrain dealing with the land": at [57]. To the extent that Meagher JA went further in Troncone v Aliperti to say that the interest granted was a charge, this was "a conclusion which, I would respectfully say, the other members of the Court of Appeal avoided": at [57]. Bryson AJ concluded at [60]-[61]: (emphasis added) … In my view the meaning conveyed by a contractual document, including what is conveyed by implication, must be understood by addressing the terms and the whole terms of the document in question, and there is no principle or true principle establishing what implication must be drawn in all cases from authority to lodge a caveat in connection with an obligation to pay money. … The circumstances that there was a debt and that there is to be a caveat, together with the nature of the caveat, certainly direct attention to whether it was intended that the debt should be protected by a charge or some other interest. It is quite likely that there was some such intention in the mind of one party or of both, but if that intention is not found expressed or by implication in their document there is no equitable interest. Authorisation to lodge a caveat does not create by necessary implication the conclusion that there must have been an intention to create an equitable interest, and that there must have been the further intention that that interest should be a charge over the property. 1. The application of these principles in Taleb is illustrative. There, the owner entered into a deed of acknowledgement with a creditor which provided: The Debtor will grant to the Creditor the right to register a Caveat over the Debtor's interest in the property located at [address] ('the secured property'). 1. The deed made no reference to a charge or to any steps which the creditor might take against the property in the event of non-payment of the debt, or at all. The operative part of the clause had concluded before reference to the property. There was no other reference to the property in the deed, except as the address of the debtor. The description of the property ('the secured property') was not used elsewhere in the deed and was not an operative provision but restated reference to the address as a defined expression, which was not then used. Bryson AJ held that the caveat was not supported by an equitable interest in the property. His Honour observed, "To refer to the property as "secured" is not to say that the creditor has security over it: the word "secured" does not indicate that in any way. If there were a … charge the creditor would be secured, not the property": at [65]. Whilst the clause showed the intention of the debtor to grant the creditor the right to register a caveat over the debtor's interest, it did not convey an intention to give the creditor an interest in the property. Further, "the grant is to happen in the future, but no event or condition is stated in which it is to happen. All this is too insubstantial matter out of which to spin a filament of implication": at [65]. 2. In Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393, Gleeson JA (with whom Meagher and Leeming JJA agreed) reconciled the apparent conflict between these authorities when observing that the statements of Mahoney and Meagher JJA in Troncone v Aliperti could not be taken as a principle that authority to lodge a caveat, given by a registered proprietor in connection with an obligation to pay money, implies an intention to create a charge: at [83]. Rather, the implication was derived from the facts of the case, as was clear from the summary of the proposition in Troncone v Aliperti given by McLelland CJ in Eq in Coleman v Bone. 3. The same implication arose from the facts in Aged Care Services. There the registered proprietor entered into a joint venture agreement to develop the property. The details of the joint venture agreement appear in the first instance judgment of McDougall J: Aged Care Services v Macedonian Aged Care [2012] NSWSC 531. Under the agreement, the joint venturer was to pay $4.5 million to the owner to be applied inter alia towards the discharge of existing mortgages and, in return, the joint venturer was to receive an equitable charge over all the property of the registered proprietor. The charge was not to be granted until the $4.5 million had been paid: at [50]. The parties were also obliged to execute a deed of charge to give security to each other for performance of their respective obligations: at [51]-[52]. 4. Discussions then ensued between the owner and joint venturer (described by McDougall J at [60]-[62]): the owner asked the joint venturer to pay out an existing mortgage as the bank was "breathing down our necks". The joint venturer said it wanted security and an amount on account of interest. Further, "We will pay out the loan if we get a caveatable interest. Until the whole deal is put together I want to be a secured lender in place of the bank." The owner said, "You will be secured." A few days later, a different proposal was advanced by the owner, to which the joint venturer replied, "We will still need a caveatable interest over the property and one over your house." The joint venturer proceeded to pay $792,000 to the bank and, with the consent of the owner, lodged a caveat, which described the caveatable interest as arising under the joint venture agreement. McDougall J found that the funds were advanced under the joint venture agreement. 5. On appeal, Gleeson JA concluded that the authority given by the owner to lodge a caveat carried with it by implication the grant of an equitable charge, having regard to the express reference in discussions between the parties to obtaining "security" by way of a caveatable interest, to which the registered proprietor agreed: at [82]-[85]. Of interest, the Court had regard to evidence beyond the bounds of a written instrument, in particular, discussions which occurred after execution of the joint venture agreement and before lodgment of the caveat. The fact that the joint venture agreement envisaged that the joint venturer would receive an equitable charge on the provision of funding likely provided important context for the discussions which followed. 6. In Ta Lee, the Court "fully agree[d]" with Bryson JA's observations in Taleb, and the endorsement of his views in Aged Care Services: at [98]. In Ta Lee, the relevant clause provided that, in the event of default by the borrower: The Lender may also … Lodge and maintain a caveat on the titles to the Aurora Site or the consolidated title for the Aurora Site until such time the Lender receives full payment of all monies payable to the Lender under or pursuant to this Agreement … 1. Whether Ta Lee had an equitable charge depended upon a proper construction of the clause; "The question is not whether a contrary intention exists such that no implication should be drawn": at [101]. The clause, on its proper construction, did not give rise to an equitable charge as there was no reference to "security", "secured interest", "charge", "caveatable interest" or other language pointing to Ta Lee having an equitable charge, particularly in circumstances where the deed had been professionally drafted. "Had the parties intended for Ta Lee to have a secured interest, the Deed could have said so and it is to be expected that it would have made express provision to that effect": at [104]. Whilst the parties use the language of "secured monies" when referring to the obligations of the guarantors, the recitals to the deed characterised the relationship between Ta Lee and the registered proprietor as "simply that of a lender (creditor) and borrower (debtor)", being language inconsistent with Ta Lee being a "secured creditor": at [105]. 2. These authorities provide useful examples of when an equitable charge may arise by implication. As Banks-Smith J observed in Swinburne v Bose [2016] WASC 299, "Ultimately, little can be gained from attempting to compare the precise wording of clauses considered in other cases. The differences are often subtle. Whether or not the relevant intention to grant an interest in the land can be implied will always depend upon the terms of the relevant contract in the particular circumstances to hand.": at [62]. As to when such a charge is created, this will likely depend "on the proper construction of the relevant agreement, and the circumstances in which, and the time at which, the creditor is authorised to lodge the caveat: In the matter of Westpac Banking Corporation [2015] NSWSC 869; (2015) 18 BPR 35,501 at [48] (per Robb J). Submissions 1. The agent submitted that, whilst the Sole Agency Agreement did not use the word "charge", it clearly created one. The surrounding circumstances in which the Sole Agency Agreement was executed included discussions with Mr Fayad that C88 and related Dyldam entities were in default and that PIA required security to agree to Mr Fayad's request to receive part-payments of commissions owing to it. The fact that Mr Wang and Mr Fayad had a number of conversations as to security, at or around the time the Sole Agency Agreement was entered into, was important in determining whether an equitable charge should be found have been granted by implication: Aged Care Services Pty. The agent submitted that the right to lodge a caveat conferred by clause 12.9, and given further content by clauses 12.10 and 12.11, supported a conclusion that the parties intended to create a charge in favour of the agent to "protect", that is, secure the agent's interest in clause 12.10. The charge arose on execution of the Sole Agency Agreement, save for the Agency Lots which did not then exist as the strata plan for Stage 4 and Stage 5 had not been registered. The charge in respect of those lots arose when the strata plans were registered, as C88 had then performed the step necessary to bring the property into existence. "Additional" Agency Lots became subject to the equitable charge when the fourth Supplementary Agency Agreement was executed. 2. Whilst the agent's Commercial List Statement made no reference to sub-clauses 12.15 and 12.16 in support of the contention that it had an equitable charge, the agent also relied on these sub-clauses at trial. The agent submitted that Agency Lots were made liable for the payment of the agent's commission, where clause 12.16(b) expressly provided that the sale price shall be applied against the commission. That is a charge by another name, where the Agency Lots have been expressly made liable for the discharge of a debt owed by the Owner to the Agent: Charnley at 449-450 (per Atkin LJ); In the matter of Swan Services Pty Limited (in liq) [2016] NSWSC 1724; (2016) 12 BFRA 224 at [281]-[284] (per Black J); Morris Finance Ltd v Free [2017] NSWSC 1417; (2017) 18 BPR 37,223 at [30]. There is an immediate right of recourse to identifiable property: Roberts v Investwell at [29] (per Bathurst CJ, with whom Beazley JA and Tobias AJA agreed). 3. The agent also sought, in reply, a declaration to give effect to a concession said to have been made by the liquidator's counsel that the agent can still exercise its right under clause 12.15(b) notwithstanding that C88 is now in liquidation. Orally, the agent's senior counsel sought to amend the summons to the extent necessary to seek that declaration. I was unable to identify the concession relied upon but, in any event, no proposed amended pleading was submitted to the Court and I am not minded to grant declaratory relief 'on the run'. 4. The liquidator submitted that the Sole Agency Agreement did not create an equitable charge; there was no reference to the plaintiff having a secured interest over the properties, or a charge, or indeed that the plaintiff had a caveatable interest. Rather, clauses 12.9 and 12.11 were similar to Ta Lee, which the Court of Appeal held did not give rise to an equitable charge: at [104]. Pre-contractual negotiations between Mr Wang and Mr Fayad, in which they each referred to "security", were not relevant to the construction of the later written agreement and, in any event, did not shed light on the proper construction of the instrument, unlike in Aged Care Services. 5. As to the agent's reliance on clauses 12.15 and 12.16, the liquidator submitted that the heading, "Further Right of the Agent in Respect of Accumulated or Accrued Commission Entitlement", was for convenience only and did not affect interpretation: clause 1.2. By these clauses, the agent was given a right to purchase units in the development. The agent had never exercised this right. If, when the agent exercised this right, there was commission "due and payable", then the agent or its nominee could pay the purchase price by setting it off against that commission. But the agent's right to acquire an apartment in this manner did not depend on the existence of outstanding commission; if the agent thought an apartment was available at a good price, it just had to pay with money. The liquidator submitted that this process was very different from "a right of realisation by judicial process in case of non-payment of [a] debt", this being the essence of a charge: Swiss Bank Corporation; Tyler, Young & Croft, Fisher & Lightwood's Law of Mortgage (3rd Australian ed, 2013, LexisNexis) at [2.2]. 6. In the alternative, the liquidator submitted that any equitable charge only extended to amounts owing to the agent in respect of the Agency Lots in the schedule attached to the Sole Agency Agreement. Of the 34 Agency Lots in the schedule to the Sole Agency Agreement, only ten had been sold; only commission payable in respect of these ten lots would be covered by any equitable charge. There was nothing in the language of the fourth Supplementary Agency Agreement to make "Additional" lots Agency Lots for the purpose of the Sole Agency Agreement. Conclusion 1. As the authorities make plain, in determining whether a party has an equitable charge, the focus remains on the objectively ascertained contractual intention of the parties to confer a proprietary interest as security for a present or future debt, accompanied by a present right to have the property made available for payment of that debt. The right to lodge a caveat over the debtor's property may or may not give rise to the implication of an equitable charge depending on the terms of the contract, construed as a whole, and having regard to the particular facts of the case. The intention to create an equitable charge must exist in reality and appear clearly, it being the implication of an interest in real property. 2. Here, the agent relied on a wide range of discussions and contracts, occurring before, during and after execution of the Sole Agency Agreement. Post-contractual conduct can be put to one side, where such conduct is admissible on the question of whether a contract was formed but not on the question of what a contract means: Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25]–[26] (per Mason P). Post-contractual conduct can be availed of to find the terms of a contract not wholly in writing: Lym International Pty Limited v Marcolongo [2011] NSWCA 303; (2011) 15 BPR 29,465 at [125] (per Campbell JA, with whom Basten JA and Sackar J agreed). Here, there is no doubt that a contract was formed and in writing. Indeed, as an interest in land, an equitable charge may only be created by writing: section 23C, Conveyancing Act 1919 (NSW). 3. Turning then to the facts of the case which, together with the contract, may give rise to the implication of an equitable charge, under the first and second agency agreements the agent was entitled to an initial part-payment of its commission following receipt of a deposit, with the balance on completion of the sale of the apartment, albeit the agent's right to payment of the balance could be delayed by reason of the requirements of the secured lender in some circumstances. In the second agency agreement, the agent also had the option of taking an apartment in lieu of unpaid commission. Mr Wang and Mr Fayad then discussed a range of proposals to pay the agent's outstanding commission, as summarised at [79]-[81]. In short, the agent agreed to take only 3.3% of the sale price on completion, again, due to the secured lender's requirements, and to look to the deposits paid on apartments in Stage 4 for the balance owing. The agent and C88 re-negotiated commission such that the agent received a fixed percentage of the sale price, rather than the excess of the price above MUP. 4. When the Sole Agency Agreement was negotiated, the agent was then owed a significant amount of unpaid commission in respect of apartments already sold. Mr Wang said he needed "some security." When asked what security he wanted, Mr Wang said he wished to add caveat clauses to the agency agreement. The clauses were added. When Mr Wang further discussed the proposed contract with Mr Fayad before execution, Mr Wang's description of clauses 12.9 to 12.11 to Mr Fayad as "the security provisions" is noteworthy. 5. Turning to the Sole Agency Agreement, the caveat clauses likely came from Mr Cheung's template. Notwithstanding this, I do not think it can be said that the agreement was professionally drafted, as in Ta Lee, as Mr Cheung had drafted these clauses for use in agency agreements generally, rather than to reflect the specific discussions had by Mr Wang and Mr Fayad. The absence of express reference to a charge has less significance where the instrument was prepared by either Mr Wang or his staff. 6. Clause 12.9 recorded C88's agreement to the agent lodging a caveat over C88's property, identifying which apartments could be caveated and in what circumstances. 7. Clause 12.10 provided that the caveat provision entitled the agent "to protect" its interest to commission, compensation or damages. It was not suggested that the agent had any proprietary interest to secure any entitlement to compensation or damages which, by the very nature of such claims, are ordinarily unsecured. This may suggest that nor was a proprietary interest intended "to protect" the agent's right to recover unpaid commission. Also noteworthy, notwithstanding the conversation between Mr Wang and Mr Fayad (described at [31] and [36]), the word "security" was not used in clause 12.10. Rather, the use of the words "to protect" in clause 12.10 is similar to the clause in Troncone v Aliperti, which only one member of the Court of Appeal found created an equitable charge (cf Redglove Projects v Ngunnawal Local Aboriginal Council [2004] NSWSC 880 at [20] per White J). 8. Clause 12.11 dealt with the circumstances in which the caveat might be removed, being on the agent's "full receipt of its Commission …" Clause 12.11 provided a contractual bar to an application to remove the caveats, which would be unnecessary if the sub-clauses were intended to create a charge. 9. As such, by clause 12.9 to 12.11, the agent was entitled to lodge a caveat and was not obliged to remove the caveat until "full receipt of its Commission entitlements". The sub-clauses said nothing about the agent's ability to require the sale of the caveated property. Nor was this mentioned in the conversations between Mr Wang and Mr Fayad. Rather, a recurring theme throughout negotiations was that the agent's entitlement to commission or to lodge caveats was subject to the exigencies of C88's financier. This brings to mind Bryson AJ's observation in Taleb that contractual authorisation to lodge a caveat without creation of an equitable charge may nonetheless serve a commercial purpose and is neither irrational nor uncommon. At [63]: … the advantage sought by provisions such as these is not always the advantage of owning an equitable interest such as a charge; there are real advantages in having a caveat on the register and impeding the registered proprietor's dealing in this way, whether or not one owns an interest in the land; once a caveat is lodged it is a complicating factor and an impediment for the registered proprietor's dealing, and getting rid of the caveat involved a certain amount of difficulty. … Registered proprietors may agree to put up with an inconvenience as a term of their dealings, and in my experience from time to time they do. 1. What is not clear from these sub-clauses is an objective, contractual intention to confer a proprietary interest on the agent as security for unpaid commission, nor any present right to have the caveated property made available for the payment of that commission. The implication of an equitable charge does not "appear clearly" from the document. Mr Wang's use of the word "security" in two conversations with Mr Fayad before execution of the instrument does not change this when the factual background is viewed in toto. Rather, the caveat provisions gave the agent the ability to interrupt or prevent the sale of an apartment until unpaid commission had been paid, but no entitlement to bring about the sale of the apartment itself and use the proceeds of sale to pay the debt owed. The caveat clauses did not grant an implied equitable charge. 2. The agent's reliance on clauses 12.15 and 12.16 was not pleaded. However, as the liquidator addressed the matter in submissions in the event that I was minded to hear the argument, and as the issue turns on the terms of the Sole Agency Agreement, I will deal with it; it does not require any additional evidence and the liquidator has been able to consider the matter. I note, however, that these clauses were not referred to by Mr Wang when he spoke to Mr Fayad after having circulated the proposed Sole Agency Agreement and described the "security provisions": see [36]. Nor were these clauses cited in the caveat when describing the equitable charge: see [61]. More importantly, the same provisions were included in the second agency agreement (see [24]-[25]), executed before there was any discussion about "security". If the agent's submission is correct, then the agent had an equitable charge all along and did not know it. 3. Consideration of these sub-clauses requires application of the principles summarised in Roberts v Investwell, as described at [92]-[96]. Sub-clauses 12.15 and 12.16 do not appropriate property of C88 to the agent for payment of a debt, nor give the agent a present right to have the property made available for the payment of its debt. The first option given in sub-clause 12.15(a) is that the agent can direct C88 to pay accrued commission to the agent's nominee. The second option given in sub-clause 12.15(b) is that the agent may nominate an apartment to be transferred to the agent at the MSP. At most, the sub-clauses are an agreement to create a charge in favour of the agent on request, which does not create an equitable charge as no immediate proprietary interest or right to recourse to a particular asset is conferred on the creditor: Roberst v Investwell at [30]. The sub-clauses do not refer to a charge, or mortgage or anything other than the ability, on request, to require C88 to sell an apartment to the agent at a set price, which price could be off-set against the commissions owing. Whilst I do not agree with the liquidator that the agent was entitled to exercise this option in the absence of being owed commission, nor do I consider that these sub-clauses evince an intention to confer a proprietary interest as security for a present or future debt. There was no equitable charge. It follows that the agent is not entitled to orders for judicial sale. ILLEGALITY 1. If I am wrong and the Sole Agency Agreement does in fact give rise to an equitable charge, then the question is whether such a charge is unenforceable for illegality. In this eventuality, I consider that the "Additional" 67 lots in the fourth Supplementary Agency Agreement were added to the 34 units in the Agency Lot Schedule to the Sole Agency Agreement, contrary to the liquidator's submission: see [54]. If I am also wrong about rectification, then further lots will also need to be added. 2. Division 4 of Part 3 of the Property and Stock Agents Act is entitled "Conflicts of interest". Within this division, section 49(1) of the Property and Stock Agents Act provides: A real estate agent who is retained by a person (the client) as an agent for the sale of property must not obtain or be in any way concerned in obtaining a beneficial interest in the property. Maximum penalty--200 penalty units or imprisonment for 2 years, or both. 1. Examples of when such an interest may be obtained are provided in section 49(5): (5) Without limiting this section, each of the following is considered to constitute the obtaining of a beneficial interest in property— (a) purchasing property, (b) obtaining an option to purchase property, (c) being granted a general power of appointment in respect of property. Obviously, an equitable charge is a beneficial interest in property. 1. Section 49(3) provides that there is no offence in specified circumstances: (3) A person does not contravene this section by obtaining a beneficial interest in property if— (a) before the person obtains the interest, the client consents in writing in a form approved by the Secretary to the person obtaining the interest, and (b) the person acts fairly and reasonably in relation to the obtaining of the interest, and (c) no commission or other reward is payable to the person in relation to the transaction by which the interest is obtained, unless the client consents in writing in a form approved by the Secretary to the commission or other reward being paid. 1. The form approved by the Secretary is a three-page document which sets out, in plain English, the import of section 49. The form requires the client and the agent to provide their details, together with details of the property. The form contains a table in which the parties are to record the nature of the beneficial interest which it is proposed that the agent will obtain. A further table calls for details of any commission or other reward which the agent is to receive in addition to the beneficial interest. The form then requires execution by the agent and the client. Before the client's consent appears the following warning: AGENT TO OBTAIN CLIENT CONSENT BEFORE OBTAINING A BENEFICIAL INTEREST IN PROPERTY This form must be given to you before the real estate agent/assistant real estate agent obtains a beneficial interest in the above property e.g. the agent or assistant agent purchases or obtains an option to purchase it. If this form is given to you afterwards you should not sign below. A real estate agent retained by a client to sell property or an assistant real estate agent employed by that agent must not obtain an interest in that property or be remunerated in relation to the transaction by which the interest is obtained. However, the agent or assistant agent may do so, if the client consents in writing in this form. Agents who have their client's consent in obtaining an interest in the property may not receive a commission or any other reward in relation to that transaction, unless the client consents in writing in this form. 1. Section 49(1), together with the ability to avoid a contravention of the sub-section by obtaining the informed consent of the client, reflects equitable principles concerning fiduciaries. A real estate agent is in a fiduciary position vis a vis their client: Pedersen v Larcombe [2008] NSWSC 1362 at [48]-[49] (per Palmer J). An agent as fiduciary has a duty not to promote their personal interests by making or pursuing a gain in circumstances where there was a conflict or a real or substantial possibility of a conflict between those personal interests and the interests of their client (the "no conflict" rule). An agent as fiduciary has a duty not to obtain any unauthorised benefits or profits from their position (the "no profit" rule): Chan v Zacharia (1984) 154 CLR 178 at 198-199 (per Deane J, Brennan and Dawson JJ agreeing); Clay v Clay (2001) 202 CLR 410; [2001] HCA 9 at [56] (per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ); Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31; Breen v Williams (1996) 186 CLR 71; [1996] HCA 57. 2. A fiduciary may overcome the operation of the "no profit" rule by making a full and frank disclosure of their material interest in the outcome of the relationship subject to that duty and seeking the active consent of the other party: Parker v McKenna (1874) LR 10 Ch App 96. Absent full disclosure by the agent and the client's consent, the agent must account to the client for any benefit received as a consequence of breach of duty: Pedersen v Larcombe at [49]. Section 49 and the form approved by the Secretary formalises these principles and provides a simple way for agents to make full disclosure and for clients to give consent. 3. The intent of the legislation is to protect consumers, as confirmed in the second reading speech by the Minister for Fair Trading: NSW Legislative Assembly, Parliamentary Debates (Hansard), 9 May 2002 at 1964-1970. Further, the Minister explained at 1967-1968: Calls for full disclosure of any conflict between an agent's duty to a client and any beneficial interest held by the agent have also been taken seriously in the development of the bill. Clearly, consumers expect their agent to undertake his or her duties fairly and openly to achieve the best result for them. Generally, the bill prohibits real estate agents and their sales employees from obtaining or being connected to the obtaining of a beneficial interest in the sale of a property. The client's agreement will need to be obtained where the agent wishes to retain entitlement to these benefits. 1. Here, whilst the Sole Agency Agreement made some attempt to address the requirements of section 49, the agent did not suggest that it had succeeded in doing so. Rather, the Sole Agency Agreement appeared to try to 'contract out' of the Act, where the clause appears to have been directed to the prospect that the agent may take apartments in lieu of commission under clause 12.15 and 12.16: 10 S.49 OF THE ACT 10.1 The Owner acknowledges that the Owner does not in any way suffer detriment or any prejudice where the Agent, its members or officer and any of their relatives, or any sales person employed by or associated with or related to the Agent, any member or employees of the Agent, or any of their relatives or related parties obtain a beneficial interest in any Agency Lot within the meaning of s49 of the Act, so long as and provided that the sell price for the Agency Lot is not less than the MSP for the Agency Lot concerned. 10.2 The Owner does not require any prior disclosure where the purchaser obtaining a beneficial interest may fall within s49 of the Act. The Owner warrants that where any purchaser referred, nominated, or introduced by the Agent may fall within s49 of the Act, the Owner accepts the following deeming provisions shall apply: (a) the Agent had duly made the relevant disclosure to the Owner prior to exchange of contracts for the agency lot concerned; and (b) the Owner has duly consented in accordance with s49(3) of the Act, before contracts with any such purchaser were exchanged, in the required form and manner, and the Owner is also deemed to have duly consented to commission payable to the Agent for such sale. 10.3 Further the Owner warrants that where it is necessary or where requested by the Agent, the Owner will do all things and sign all such form approved by the Secretary as defined in the Act, for the purpose of s49 of the Act and such form is further deemed to have been duly attended to before the parties entered into the sales contract. Submissions 1. The liquidator submitted any equitable charge was either created by the Sole Agency Agreement was unenforceable by reason of the contravention of section 49(1). There was no reason to refuse to take this path, having regard to the considerations in Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215; [1997] HCA 17, Gynch v Polish Club Ltd (2015) 255 CLR 414; [2015] HCA 23 or Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25. Here, the agent was not ignorant of the factual circumstances giving rise to the contravention. The agent was aware of section 49. The agent was not a member of the class benefited by section 49. The contravention was not induced by anything that the client did. The illegal purpose was carried into effect. Further, the liquidator submitted that clause 1.2(h) of the Sole Agency Agreement provides that, in these circumstances, the caveat clauses should be "read, interpreted and construed beneficially to and for the benefit of the Agent so as not to be repugnant or contrary to law and where this is not possible, the term or provision shall be deemed to be excised and not form part of the Agreement." As such, the clauses conferring an equitable charge ought to be excised from the contract. 2. The agent submitted that section 49 did not apply. The mischief which section 49 was designed to prevent was agents acting in conflict of interest in the performance of their role. As such, section 49 should be interpreted and applied to prevent conduct of an agent which would be inconsistent with the fiduciary duties that agent owes a client. Such duties arise after the agent is retained. In order for a contravention to arise, section 49 requires that the act of "obtaining" be committed by a person who "is retained" as agent for sale. That is, there must be a retainer in existence before the beneficial interest is obtained. As such, the creation of a security interest by the agreement that creates the retainer does not give rise to a contravention. The agent does not owe fiduciary duties to the client in relation to the negotiation of the retainer: the fiduciary duties and the potential for conflict of interest arise once the retainer is made. 3. The agent submitted that, on entry into the Sole Agency Agreement, it obtained an equitable charge over lots in Stage 2, being the only (relevant) strata plan registered before execution of the agreement. The agent obtained a charge over lots in Stage 3 on registration of that strata plan on 16 August 2018. The agent obtained a charge over lots in Stage 4 on entry into the fourth Supplementary Agency Agreement in August 2019, which added the lots to the Agency Lot Schedule. As such, the agent submitted that, in respect of the Agency Lots which formed part of Stage 2 and Stage 4, any illegality did not arise after the agent was retained to sell the Agency Lots as annexed to the Sole Agency Agreement, but arose at the time of the agent was retained, where the granting of the charge being simultaneous with the entry into the agreement. The temporal element of section 49(1), being that a retained agent must not obtain a beneficial interest, was not satisfied. In relation to the Agency Lots which formed part of Stage 3, the act or omission which granted the charge was C88 registering the strata plan, rather than any act or omission of the agent. Accordingly, it was said that there was no act or omission of the agent when retained, which resulted in the agent obtaining a beneficial interest in these properties. 4. If the Court found that there was a contravention of section 49(1) of the Act, then the agent submitted that the Court should not find that the equitable charge in the agent's favour was void for illegality or unenforceable. Section 49 was not unlike the offence provisions considered in Dalgety and New Zealand Loan Limited v C Imeson Pty Ltd [1964] NSWR 638; [1963] SR (NSW) 998 and Gnych v Polish Club. Further, section 49(3) of the Act proscribes, similarly as in Gnych, that the illegal act of an agent in obtaining the beneficial interest may be validly obtained, if the client signs a form and the agent acted honestly and fairly in doing so. Accordingly, this was not a case where the contract itself was made illegal or unenforceable by the Act. Conclusion 1. I do not accept the agent's submissions regarding the proper construction of section 49(1), that is, that the section is not contravened so long as the agent obtained the beneficial interest in property before or by execution of the agency agreement itself. The purpose of the Act is to protect the interests of consumers of real estate agency services: Guan v Lui [2021] NSWCA 65 at [34] (per Meagher JA, with whom Bell P and Basten JA agreed), citing Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 4) [2017] NSWSC 436 at [90] (per Ball J); Parliamentary Debates, 9 May 2002 at 1965. The point at which an agent's remuneration is most likely to be documented – whether that be commission, a beneficial interest in property or other reward – will be the agency agreement. Were the agent's construction to be accepted, the consumer protection sought to be conferred by section 49 would be largely eroded. 2. Nor is such a construction warranted by the language of the statute. Section 49(1) is agnostic as to whether an agent obtains a beneficial interest in the property when entering into an agency agreement or beforehand or subsequently. The section is directed to whether the agent has obtained the client's written consent before obtaining the beneficial interest. As much is confirmed by the form approved by the Secretary, which warns the client, "This form must be given to you before the real estate agent … obtains a beneficial interest in the above property … If this form is given to you afterwards you should not sign …" As such, were it necessary to decide, I would conclude that the agent contravened section 49 by obtaining a beneficial interest in the client's property without complying with section 49(3). (Of course, the agent has not been charged with this offence and any such charge would need to be determined to a different standard of proof). 3. The penalties prescribed by section 49(1) do not include rendering the agency agreement void. As to whether contravention of section 49 has the consequence that any associated agency agreement is void, in Gnych v Polish Club at [47], French CJ, Kiefel, Keane and Nettle JJ embraced Mason J's observation in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 423: There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished. 1. As Gageler J explained more fully in Gnych at [63]-[75], a strong presumption of unenforceability has given way to approaching the matter by proper construction of the statute. "An agreement which is not denied legal operation by statutory force may still be unenforceable … by operation of the common law by reference to considerations of public policy. The cases in which that might occur, however, must now be closely confined": at [70]. Further, at [73]: It is not the function of the common law to seek to improve on a regulatory scheme by supplementing the statutory sanctions for its breach. If a statute itself does not operate to deny legal operation to an agreement made in breach of one of its prohibitions, or to render that agreement unenforceable by reason of that breach, the coherence of the law is best served by a court respecting and enforcing that legislative choice. 1. Considerations of public policy may nonetheless dictate that the contract is unenforceable. Relevant considerations were expounded by Gageler J at [75]: A court examining the application of that consideration of public policy to the enforcement of an agreement made in breach of a statutory prohibition will examine the intention of a person in entering into the agreement and in seeking to enforce the agreement. The court will recognise that, "whilst persons who deliberately set out to break the law cannot expect to be aided by a court, it is a different matter when the law is unwittingly broken". The court will weigh the consequences of withholding a remedy to enforce the agreement in light of the objects or policies which the statute seeks to advance and the means which the statute has adopted to achieve that end [and whether] the consequence of withholding the remedy [are] proportionate to the seriousness of the illegality and not incongruous with the statutory scheme. The moulding of an equitable remedy, if sought, might involve other considerations and permit of greater flexibility. 1. I note also the observations of Professor Carter in Contract Law in Australia (7th ed, 2018, LexisNexis) at [25-13]: "it is important to consider whether the intention [of the statute] is to protect the public, or merely to exact a penalty for the benefit of the revenue. If the statute is designed to protect the public, a contract in contravention of it will generally be regarded as prohibited. … However, [this] is merely a factor to be considered, and is not conclusive". 2. Certainly, the object of the statute is to protect consumers. That said, clients who enter into agency agreements may range widely from 'mums and dads' to sophisticated clients such as, in this case, an experienced property developer. The value of the property may also range widely from the family home to, as here, a development resulting in four strata plans and hundreds of apartments. An agent may obtain a beneficial interest in the property by a wide range of contracts, including an agency agreement but also perhaps a contract for sale of land, an option or a joint venture agreement. Such contracts may involve third parties. If such contracts were unenforceable by reason of a contravention of section 49(1), then the consequence may also harm the client if, for example, the agent obtained a beneficial interest in the property but the overall deal was a good one from the client's perspective. Third parties may be affected. 3. Perhaps for these reasons, the penalties for contravention of section 49(1) are specific and directed to punishing the agent rather than any broader consequences which may also impinge on the rights of others. As such, were it necessary to decide, I would conclude that contravention of section 49(1) does not render an agency agreement unenforceable per se. Of course, as Gageler J explained in Gnych, considerations of public policy may dictate that an agency agreement is unenforceable in a particular case. 4. Here, as the agent submitted, clause 10 of the Sole Agency Agreement procured the client's consent, albeit not in form required by section 49(3). I consider that the agent also acted fairly and reasonably in obtaining any equitable charge where the terms of the Sole Agency Agreement were the subject of negotiation, where C88 was a sophisticated client with solicitors, and where the agent was already owed substantial amounts of unpaid commission and was being asked to continue to act as agent for the client in respect of the sale of further apartments in the development. It would not be incongruent with public policy and the purpose of the Act to permit the agent to have the benefit of an equitable charge in the circumstances. It would not be proportionate to the seriousness of the contravention for the agent to be deprived of the benefit of an equitable charge for failing to obtain the client's consent in the form approved by the Secretary: Nelson v Nelson. ORDERS 1. For these reasons, I make the following order: 1. Dismiss Prayers 1, 1A and 2 of the Amended Summons filed on 26 October 2021, with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 August 2022